April 7, 2004

Brazil Soy Crop Seen Down To 56.5 Million MT

South America's 2003-04 soybean crop is expected to fall again Thursday in the U.S. Department of Agriculture's April supply and demand report to account for unfavorable growing conditions in Argentina and Brazil, according to a survey of industry experts.
 
The U.S. Department of Agriculture's April supply and demand report is scheduled to be released 0730 CT (1230 GMT) Thursday.
 
Brazil's soybean crop is expected to fall to 56.5 million metric tons, down from 59.5 million in the March report, analysts said. The March number was down from 61.0 million tons in February.
 
At the same time, Argentina's soybean crop is seen falling to 35.5 million tons from 36.5 million in March.
 
"They won't take it down to the level seen at the Brazilian numbers," said John Kleist of Kleist Research and Consulting in Arlington Heights, Ill., referring to forecasts by private Brazilian agricultural firms. "That would be a bit apocalyptic."
 
Analysts said dry weather in the south of Brazil and problems with Asian rust have cut yield potential, taxing the size of the overall crop. Experts, though, expect further cuts in the future.
 
Private Brazilian agricultural firms in the past couple of weeks have lowered their estimates to much smaller levels. Celeres/MPrado Consultoria lowered its estimate for the 2003-04 Brazilian crop to 54.03 million metric tons. Safras e Mercado cut its forecast to 52.28 million tons, and AgRural dropped its figure to 52.02 million tons.
 
Argentina's crop suffered from similar problems of dryness, particularly in western regions earlier in the year. Last month the Buenos Aires Cereals Exchange put the crop at 34.5 million tons, and the country's Agriculture Secretariat said the could would likely be 34.7 million tons.
 
US SOY BALANCE SHEET TO SEE SHIFTS
 
Analysts agreed that while the soybean-ending stocks figure would most likely remain unchanged at 125 million bushels, domestic crush could be raised by five million to 10 million bushels while exports would be cut by the same amount. In the last report, domestic soybean crush was raised to 1.465 billion bushels while exports were lowered to 890 million bushels.
 
Strong soybean crush margins that have failed to weaken despite historically high soybean prices have kept crush rates firm and demand unrelenting, sources said. The export figure, though, has been crimped to accommodate the unyielding domestic demand, sources said.
 
Eyes will also be on the very shallow residual figure. While some see the USDA dipping into the figure yet again to give more room for crush and exports, others think the figure will likely stay put, considering that it is already at a low 33 million bushels.
 
"Residual usage may not be changed this time around," said Anne Frick, oilseeds analyst for Prudential Securities in New York. "But it could be reduced in the future."